cnbc. i'm andrew ross sorkin along with joe. joe, do you have a cold? >> i do. >> how do you go on a vacation for two weeks. you leave us in the summer and then you get a cold. >> because when you sweat and play tennis every day and sweat, it's 100 degrees, and then you go into air conditioning. that's what -- >> the air conditioning did it? >> yeah, and i need a vacation from my vacation. there was paddleboarding. >> which is hard. it's hard on the stomach, right? >> maybe that's why i couldn't do it. you need a core. i fell left, i fell right. i fell center. i fell backwards. i lost sunglasses that i had for 15 years. but i got some really great new ones which are 580 lenses. they're incredible. you have to see them. but my wife had given me these.

that was bad. they are in davey jones locker. nice work with the markets, andrew. >> down two weeks in a row. >> two weeks? >> was there a single up day? >> i thought there were two up days. >> i looked. might have been two up days. >> you cannot hold me responsible for what happened. >> did you turn bullish or something? have you been saying bullish stuff for the past two weeks? >> that would give people a clue. >> cisco, walmart. >> all the retailers terrible. >> everything was terrible. you left, everything was terrible. >> now you are back. >> interest rates are up 0.25% in the last week. >> terrible headlines this morning. >> andrew wants to get to the headlines. >> you'll want to comment on this, i'm sure. making headlines, the u.s. government looking into whether jpmorgan hired the children of chinese officials to help it boost its business in china. "the new york times" citing a u.s. government document for the details of this investigation. jpmorgan saying it's fully cooperate with regulators.

the company disclosed part of this investigation late last -- not late last week but the week before that. we're going to have a lot more on this story with the former s.e.c. enforcement attorney in just a few minutes. >> a foreign corrupt practices investigation? do you know what that entails? that is horrendous. that is every single division of the bank all over the world will likely have to look into everything. it's every time you deal with foreign corrupt practices. >> this is s.e.c., though. this is s.e.c. doing this. >> my understanding is it's foreign corrupt practices act. >> anyway, i mean, we talk about what -- what is your great phrase when we talked about walmart. you say what happens in -- >> yeah, that to try to apply our -- to try and do -- i had a long discussion about whether the means justify the ends in certain means and you probably shouldn't go down that route. but there are certain countries where when in rome, you won't

get anywhere -- >> that was it. >> it's not even against the law in those countries. i was shocked like casablanca that jpmorgan might hire some rich guy's kid. >> it never happens on wall street. or at cnbc or anywhere. were they interns do you know or were they -- is cheryl sandburg paying interns now? >> you would think that the kids that are from the families over there that have some connections probably are pretty good candidates for the jobs. they probably speak english. >> as occupy wall street -- >> e-mails that say -- >> as they told us, you are an enabler of the banks. as the protesters have said.

he is. he's a -- >> i sat across from him at office night out in the hamptons at one point when his book came out. all those people yelled at you. they were very -- >> if i'm an enabler -- >> yeah. i hear you. i hear you. neither one of us get paid by them, though. >> that's true. >> you don't? why not? >> i said something about you yesterday. i was talking about -- >> oh, god. >> i was talking about this guy, this allyn sloan character from "fortune." he's been on here before. i tweeted that. you bezos. you better declare your politics. and i would say, oh, my gosh, if you are not a far left liberal, you better not try to buy "the washington post," my friend. you better get in line because you'll be disqualified. and then i tried to describe the people that are already at the post. eugene robinson, dana milbank. all these type. and i said you are probably the

most conservative or fair-minded person at the entire "new york times." that's what i said. >> thank you for that. >> but it was as far left as you are, you are probably the most reasonable person, which is why the huffington post probably doesn't like you. >> i don't know where to go with that. >> i have two points who read the allyn sloan piece. >> he better declare. >> but his point was -- >> was it the internet came from the 19th -- >> he was making a very left argument that the internet was a product of the government and, therefore, jeff bezos should be -- >> you guys lost your -- even robert schiller admits that invest investment in infrastructure comes from entrepreneurs. even bono knows it now. >> bono. >> bono? who is bono? >> oh, he's -- >> can i give one irony of that allyn sloan's piece in "fortune." "the washington post" pays to republish that piece in "the

washington post." so we'll see how long that lasts. >> jennifer rubin started following me yesterday. >> really? >> that was my moment of -- she's phenomenal. to be down there in that cesspool in the beltway working at that place and to be able to say -- anyway. we have to get on. >> we continue to follow the latest in egypt. days of bloody protest have left hundreds dead. the head of the egyptian army vowing further violence will not be tolerated. a strange statement since they seem to be committing a lot of it. the muslim brotherhood is calling for more protests. yousuf gamal el-din joins us with the latest. >> reporter: it's been another tough morning. more violence this time in the sinai peninsula. an attack near the border town of rafah, which is about 140 miles east of the northern terminal of the suez canal. nbc news understands from a

security source that two mini buses with 28 police conscripts was ambushed. they were asked to step down. and with machine guns, 25 of them were killed. three of them seriously injured. now that adds fuel to the fire. just late last night a prison transporter came under attack or at least there was some chaos that broke out there. 36. sayome say 38 supporters of morsi were killed there. this comes after the cabinet as we understand it, announced they may be legally dissolving the muslim brotherhood as a political party. you mentioned that they will be trying to hold more marches and more protests and that raises the prospect of further violence. now if you take a look at the international reactions which have been mostly ones of condemnation from united states and the european union, they are looking to review not just bilateral ties but also financial assistance. interestingly enough, nbc news

learned from a senior administration official that further policy decisions are due within the next few weeks and that if any decision is taken it would need to happen before september, before the start of the next fiscal year and that all options are on the table. and the same applies to the european union who will be holding discussions throughout the day. but how are investors feeling about this. if you pull up the chart from the egyptian stock exchange this morning after losses of 3.9% in yesterday's trade, trading to the up side to the surprise of many observers thus far we'll have to see whether they'll be able is sustain that moment num the remaining hours of trade. >> thank you very much, yousuf, for joining us live from cairo this morning. >> we're going to get back to the story we mentioned at the start of the show. the u.s. government looking into weather jpmorgan hired the children of chinese officials to help boost its business in china. jacob franker was an enforcement

attorney. good morning to you. >> good morning. >> help us with this. we were talking about when in rome, do as the romans do. we know so many people here in new york or interns for wall street bankers because they are the kids of so and so. not suggesting it's right or not suggesting it's wrong. it's possible some of these kids might have been qualified. they went to good universities. how is this all going to shake out? how do you ultimately judge whether hiring a child of a government official breaks the law? >> you hit all the issues on the head because you have to get into the issue of qualifications. is it for the purpose of influencing corruptly, but going back to the when in rome, the fact is, in rome, really throughout the world, you know, this concept, the culture of corruption and giving back to, you know, to government officials in order to obtain or

retain business which are the critical words in the statute as well as the word to influence corruptly really are at the guts of it. and the government is going to have to get behind this issue of, were these kids, were these children of government officials qualified for these positions? what qualifications did they actually bring? i think you mentioned before they were western educated, stanford and some other american universities. >> jacob, when you make reference to the statute, are you talking about the foreign corrupt practices act or -- >> fair enough. we're talking about the foreign corrupt practices act. very quickly, it's a statute that was passed in 1977. >> even though we think it's the s.e.c. here at this point? >> i'm sorry? >> even though it appears it's the s.e.c. involved here? >> both the s.e.c. and department of justice have concurrent jurisdiction. the statute, the fcpa is actually within the federal

securities laws. usually the lead investigative agency in a lot of these cases, the high-profile cases that have brought these hundreds of millions of dollar fines are all department of justice cases. and it's really their settlements that have often -- >> jacob, let's say there's an e-mail. let's say there's an e-mail that says we just interviewed so and so. she went to such and such school. seemed qualified. went through the process and we kind of like her. by the way, this is a note going up the chain to somebody. by the way, she happens to be the daughter of so and so and we're hoping she's going to help us make some introductions to such and such. let's see that's what some e-mail exists. >> very likely. and that's really where you get to the issue of compliance. the fact that the person is a relative alone is not the end of the issue. the purpose is why are you hiring this person?

>> let's say the e-mail says this company is going to have an ipo and a year from now, you know, she's the daughter of so and so and we're hoping that she's going to be able to get us in touch with the right people and make the right introductions. let's say that's exactly what the e-mails say. i'm not suggesting they do. >> then it becomes more problematic. the question really is, what was the purpose of -- really, first thing we have to look at is what was the purpose of the hiring. if what you're describing is a scenario where i'd call it a real hiring. you are hiring somebody because they have qualifications, then there is a strong argument it's not for the purpose of influencing corruptly. on the other hand you can look at the case that was brought, i think last year, involving tyson foods in mexico where you had spouses of mexican government officials -- >> but this is not that. these aren't people who don't go to work every day. >> correct. >> just on some kind of payroll on vacation somewhere. that's not what's being suggested. so what do you think is really

happening? >> the short answer is we don't know what's really happening. no question we also have read that morgan did not have a strong china presence. and this clearly enabled them to have a much more active role in business with state-owned and other enterprises. so we're really talking about issues that get to the guts of fcpa analysis. >> and speaking of that, jacob, is it a done deal? when you are involved in a foreign corrupt practices investigation, do i understand correctly that the requirements become incredibly onerous? walmart has had to do an examination of every single business they have in the entire world that is standard operating procedure when you get accused of these things. is that a done deal? is jpmorgan going to have to do that now or do we have to see how this progresses? >> yes and no. if we're really talking about discreet conduct, walmart is a different issue. walmart had a problem and didn't

respond to it. now they have to take extra measures to establish their bona fidity. you can focus on that venue, that jurisdiction where the conduct is occurring because that's really what is at issue here. the reason you go more global, particularly with multinational corporations is you really, you need to do an assessment. if we have a problem in china, do we also have a problem in other countries? the immediate focus here is going to be china and the conduct of china and their unique -- there are very unique issues here. >> real quick. should other wall street firms be worried about this? do you believe the s.e.c. is going to start looking at them? and to jpmorgan, i don't know if there's something in the water or if people just decided to put a target on their back? every other day there's a new headline related specifically to this firm. do you have a view? >> answer, nothing special about this that's targeting morgan. there are particular facts here

that give rise to the issue. we've heard recently about major pharmaceutical company having major issues in china. china has, you know, conduct in china for u.s.-based corporat n corporations is a major issue. i don't think it's specifically targeting them. your issue started with financial institutions. the s.e.c. has made financial institutions a priority going back two or three years where it started focusing on sovereign wealth funds. >> jacob, thank you for joining us. >> how did you get that job? you were in high school at "the new york times." >> yep. >> your dad was -- >> aaron sorkin is your uncle? >> i'm related to all these people. >> your father is a big-time lawyer. >> he is. >> just real quick, he sent a letter through -- >> hold on. >> through a friend of ours to try to get me a job at "the new york times" and i still have the letter when i was 18 years old

from russell lewis who was the ceo of the "new york times" at the time rejecting me saying that he was very sorry but you were too young and could not have the job. >> that didn't stop you, though. >> it didn't stop me. i got in but not through him. i got in -- i went around and around and around. >> you don't stop. i hear that. you keep going like the energizer bunny. and the world -- >> i found a way in. unfortunately or fortunately, not through my father. he would have been happier -- >> the world is a better place that you didn't. west wing. newsroom. all these phenomenal -- anyway. >> time for the global markets report. carolyn roth is standing by in london. >> good morning to you, michelle. we're pulling back just a little bit. we're off the session lows for the europe stocks 600. that follows a flat session that last week and that certainly is a big disappointment to many investors out there. it seems as though europe is now everyone's darling on the back of better than expected economic

data over the last couple of weeks. last week, we saw the strongest inflows into eu equity funds since 2008. now it's pulling us down today is definitely basic resources. the biggest decliner sectorwise. this is on lower metal prices. a little profit-taking but there's also this glencore story. let me show you shares in the combined mining company. they're on the bottom of the ftse 100 here in the uk, off by 1.4%. this is on press reports over the weekend indicating glencore will be writing down $7 billion in assets tied to its xstrata assets mainly in nickel and copper. finally the bond markets. i know you guys are watching the ten-year treasury yield inching ever so close to the 3% level. currently 2.86%. 69% rather. but the current yield at 2.74%.

and the german yields for the ten-year at a 17-month high. guys, back over to you. >> very good carolyn. thank you. we appreciate it. now dick cohey is joining us. for the last two weeks, i don't know, there has not been a voice of reason around or something. i'm not sure what has happened. >> supposedly he goes on vacation and the markets go down. >> here's my point. if i were trying to take a half full view of what we've seen, as the fed slowly starts to do what it is doing, i would like to see a slow move up in the ten-year. i'd like to see it go up to 2.70, back to 2.50. up to 2.75, back to 2.55. i'd like to see it where it is but react like it was predicted to do but not have a huge

dislocation. and it seems like everything is going according to plan from where we are. is it working? >> the speed of the rise of loan rates -- >> did they lose control? >> is a function of how severely they manipulated the bond market. >> but it hasn't been that quick of a rise. >> if you take the last four months we were 1.60. went to 2.87. that's a pretty big rise. >> and the reason is -- >> nothing has exploded. >> 2.87 is not a wrong price. 1.63 four months ago was a manipulated price. and it was the severity of the manipulation by the federal reserve that caused the speed of the adjustment. >> you are not going along with me then. you're saying it has been disorderly and it has been a -- >> it's been fast. >> has it been a reason for concern? >> i guess -- i guess my technical rule is, any time the

stock market goes up 150% you should not be shocked if there is a time correction where it doesn't go up every day. >> i was going to say -- >> let's have a sense of longer term perspective. we've gone up over 150% and we are not making new highs every single day. duh? i mean, why are we getting upset? >> we've also been told that if rates go up for the right reason, that it's something that should be beneficial long term for the stock market. are rates going up for the right reason or -- >> they are going up for the right reason because real yields are rising because of an expectation. i think we're going to make a transition from a 2% growth rate to a 3% growth rate. >> for three years you said? >> three years of real gdp growth. we're still in a stock bull market and we're going to be in a stock bull market for the next several years. but that doesn't mean you make new highs every single hour. >> it's going along, andrew, as planned. it's going along. this might work.

>> bernanke succeeded. he kept the economy growing. we didn't have a double dip. we don't have that inflation. all the inflationists were worried about. we have an expanding economy that is expanded. it's slow but it's a long recovery. it's going to last seven years. we're in the middle of a seven-year -- >> what year are we in? >> we're in the fourth year. >> lou, is he full of it? >> one point i will debate with dick is the idea that the economy is doing well right now in the sense that you look at aggregate demand and to find that you look at nominal gdp. on a year on year basis, nominal gdp at 2.9% is the lowest it's been when we haven't been in a recession or coming out of a recession. we're at a very low inflation level.

that's why we're getting positive, real gdp. but back in the bad recession of the early '80s, the worst nominal gdp got was below 3.2. when the fed has been qe, the yield was at about 2.70. then 3.95 when it ended. immediately when q/e stopped, the yield fell because the stock market started to have trouble. qe 2 began at 2.55. up to about 2.75 and when it entded about 3.20 but during that qe we went up about 120 basis points. this time at the end of the year we're around 1.70 yield on the ten-year and right now close to 2.90. so again, a 120 basis point increase on the yield of the ten-year during qe. during the previous -- the two previous qes stopped and that's not much of a selection to look at, but the yields fell because the stock market weakened.

i think the yield goes up during qe in part because as dick was saying, the -- there's an expectation that this is going to help the economy. that bernanke has done the thing that will work and the previous two times that has not been the case and, like i say, with the nominal gdp still quite so low, i don't know that that's a clear thing right now either. >> but here's the issue. the markets do not price off the last 12 months. nominal gdp earnings. they price off the next 12, 24 and 36 months. so, yes, the nominal gdp has been low in the last 12 months but that's ancient history. it's going forward, i expect real and nominal gdp, to be fastener the next 12 to 24 hours. >> when you taper it doesn't mean you're -- it means you're adding less. doesn't mean you're shrinking what you've already done. >> the market is, though, jumping. as soon as you start the tape ear. >> it's less of -- >> is it the balance sheet

continues to grow if you add 60 and that money is still there to -- we're going to talk about that because mark mobius made this point exactly in this executive edge thing. do you know how to do this? >> i do. we've been doing it. >> okay. i'm sure you haven't been doing it right, but -- >> you've been doing it left. >> that goes without saying. >> thank you. >> well done. coming up, what one well known strategist says emerging market taper terror is overdone. plus, attention car enthusiasts. a record-setting sale ff a rare ferrari during the weekend. we'll have those details next. to appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. hey ray, my uncle wanted to say thanks for idea hub. o well tell him i said you're welcome. he loves how he can click on it

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welcome back. time now for the executive edge. it's a daily segment focused on giving business leaders a leg up. let's start with one well respected investors view on the market. mark mobius says the fed tapering does not mean looming disaster for the fed markets. >> what the people fail to realize is the so-called tapering is on top of an incredible increase in money and liquidity in the united states because these qe programs have been cumulative. it's not a situation where, you know, one stops and all that money goes away. it stays there. it stays in the system. so i believe that this fear of tapering is quite overdone.

>> joe, it's right up your alley? >> what i like is the notion that everything that's happened in emerging markets across the world has been because of us. i like that idea that we are a dog and there's tails all around in emerging markets. but i don't necessarily think that's -- i think that's too much emphasis. i think china has more to do with what happened in emerging markets. >> doesn't he have to say this? >> $834 billion makes him have to say that. >> this is his business. >> okay, but whether it is or not, and we say things, too, based on -- >> yep. >> we all have our own axes to grind. >> i love mark. >> is he basically, the point i think he's making is what we just said that coming down from 85 doesn't shrink the balance sheet. the balance sheet is still going up. there's still money that if there was more demand for credit it would still be expanding based on the size of the balance sheet where it is now. >> i am sticking -- while you have been gone, i've been trying to channel you and suggest that bernanke -- >> i've got the nasdaq futures

are now above fair value for the morning. >> we'll call that the kernen effe effect. >> i leave for two weeks. andrew, it's like 8 out of 10 days. that's like -- >> guys, next story likely to get a lot of pick-up nationwide. a campaign in seattle to push minimum wage to $15. they apparently love teenage unemployment in washington state. the state already has the nation's highest state minimum wage at $9.19 an hour. >> i have given up on this one, trying to argue because there's two economists cited in the piece. both of them say that the additional jobs created by low end consumers having more money outweighs the number of jobs that are lost by employers not being able to afford -- >> but they admit jobs are lost. >> they say it's minimal. they say more are added than -- i thought there had been studies done by both sides of the

political isle that absolutely showed that this is -- but it is a price control. remember, nixon, wage price control. this is a wage control, is it not? >> of course. >> it's a nonmarket -- >> price control. pro or con on -- >> i'm generally con because i -- >> but i'm throwing in the towel. >> i do generally view higher wages means -- i'm assuming less jobs. i don't know if it's the right assumption or -- >> because economists -- >> politicians want to raise taxes on alcohol and cigarettes and they say people will drink and smoke less if we do that because the price is higher. why don't they understand that when you impose higher wages, fewer people get hired? >> michelle, here's a venture capitalist. and the second part of venture capitalist is capitalist. he says there's no time to waste. what the nation needs is money in the hands of regular consumers. a higher minimum wage is a simple and elegant solution to

the death spiral of -- >> it means fewer people -- >> then a economist at the university of california davis. higher minimum job would not lead -- minimum wage would not lead to jobs. >> you were not here last week. i am trying to think was here. the important point that there are so many people who used to use a lot of these jobs, lower end -- lower wage jobs as stepping stones to the next thing and there's a whole community of people who are now in these jobs forever. and the question is how can you actually make those living wage jobs? the question is can you make those living wage jobs without at the expense of creating less jobs, frankly, for the next generation. >> should you allow the market to dictate what a position is worth or should you make corporations -- you are never going to -- we'll have sternstein on. >> we're going to make 180-point turn her. >> jerod burnstein will be on. he's a labor economist. >> he'll have a few. >> i'm sure he thinks the

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welcome back to "squawk box." president obama will be sitting down with the leading financial market regulators today to

discuss their progress or lack of progress in implementing dodd/frank. joining us to talk about it, tony frato and jerod bernstein. hi, guys. >> hi, andrew. >> before we even go there, i have a joe question for jerod. i don't know if you heard us before. >> yeah. >> yes, i did. >> fed chief, treasury secretary. >> i wasn't going there. >> chief of staff. >> you're going minimum wage? >> i am going, who you are going to be in a biden administration? >> that's where we really need to go. >> have we talked about it? have you talked with the vice president about that? >> do you want to run the fed? >> i have not. >> do you know what you'd be in a biden administration? that's on the front age of the journal. >> i might be the guy who gets him his breakfast and maybe coffee. >> treasury secretary? >> you are going to spook the markets if you keep going like that. >> aim high, though. >> run the fed. run the fed. >> you sound like my mother. >> so modest. okay. go -- andrew wants to -- and i

think minimum wage. >> a serious question on minimum wage and then what's going on in d.c. minimum wage in seattle. >> with great respect to everyone there, that was a somewhat uninformed discussion because there's actually tons of research on this. and in fact, there are 18 states, including the district, where i sit right now, where the minimum wage is higher than the federal level so it had something quite unusual. the opportunity to do these kind of pseudoexperimental designs. and what we have sfound that moderate increases in the minimum wage and we can argue whether 15 is moderate. moderate increases have minimal job loss effect. some are negative. some are positive, but on balance, the benefits do outweigh the costs. >> okay. let's leave that -- >> tony, is that true? >> look, i'm -- local communities can do whatever they want. >> we're going to have a theoretical. a limit on -- we're going to have a minimum wage.

if you have ever seen the polling on minimum wage it polls off the charts. we'll always have it and battles on where it ought to be set. local communities can do whatever they want. a lot of labor mobility. >> you are skirting the question. that's okay. >> i pointed this out last night. you have democratic and republican clients now, don't you, tony? you are so kind and gentle at this point. we have you on to argue with the shark, bernstein who is so partisan and yet we have you on -- >> partisan? >> all i've been giving you are facts. i hate to inject facts into this conversation. >> where were you? we were all on twitter chatting about you and -- >> he was studying up. >> i'm very persuasive. and -- >> that's when tony came on. and even that is deflecting the argument. >> give us a preview of what we should expect the president to sit down and talk about. dodd/frank. also the upcoming budget battle to the extent you think sequester will become the issue.

whether it worked or failed. i'll go to you -- i'll go to whoever wants to go there. >> jump ball. >> look, i'll start. >> okay. >> i think that, look, the hot issue right now is less financial reform, although i do think the -- there's just so much dodd/frank to implement and i think you are right. i think in your tease you said it really isn't very far along. and that's very important. but right now the key issue is the -- around the shutdown and starting late october, early november. the debt ceiling and, boy, when the president starts talking about that stuff with his opponents, he's going to want to go back to martha's vineyard because all of that is up in the air and very tough. my view is they'll resolve that and we can talk about how but it's probably going to be very short term resolutions. >> tell us how and more importantly when perhaps. >> well, i think the way that the government shut down at the end of september gets avoided is through a short-term continuing

resolution. that's another -- grand more mini bargains. the debt ceiling is a tougher one. >> i don't think we'll ever have -- we should just take the words grand bargain off the table. there are no ingredients for a grabd grand bargain. no one wants it. in fact, even the pieces of it that you and i want which are really need to include tax policy aren't going to be there. >> and nobody tries to hijack the process this time? >> lots of attempts to hijack. there's going to be hijacking left and right on this, on the debt ceiling and some effort on sequestration. i don't think there's going to be really successful if they continue with this ad hoc budgeting. >> will you at least acknowledge that the democrats now are taking credit for having the lowest deficit in three or four

years and all these things are happening that are positive. yet they don't connect it to the sequester at all. and they also pretend the sequester was all the republicans idea when it wasn't in the first place. can you at least acknowledge, is it still a big net negative and the nasty republicans are taking everyone out of head start and -- >> it's a big net negative. >> but you love the new deficit that -- >> no, i'll tell you. i think the budget deficit is coming down too quickly. i strongly feel that. i really do. i don't think that's that controversial. i think it's coming down too fast. weren't you just complaining in the last segment that the economy is not growing quickly enough? >> no. not because of that. >> according to the cbo, a year from now, the sequestration will suck 900,000 jobs out of this economy. >> and that's cutting 2%. when do we cut what we need to cut? >> i don't know if those job estimates are ever really, we can ever count on those. we are in the fifth year of a -- of the recovery. at some point we need --

>> this is a recovery? >> well -- >> a week recovery. >> it's a weak recovery, but it is a recovery. >> thank you. >> we just disagree on what's causing it. >> tony, jared, thank you. we'll continue this discussion. >> vpjared. aim high. we'll talk about retail and grade the back-to-school shopping season. my kids are -- >> soon? >> yeah, but they are sad about it. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection.

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in some parts of the u.s., kids are already back to school. in other parts, the first dizz are right around the corner. can retailers count on their back-to-school sales to boost revenues? 30 of them reporting this week.

joining us with the pulse of the consumer is joel oldein from at kerney. we had a terrible spout of earnings last week from a number of retailers. macy's missing for the first time in 25 quarters. walmart not looking good as well. what's going on with retailers, and as we look at this week, where we look for earnings from them, are we going to see a lot of bad news? >> it's interesting this year. we're coming off a record 2012 back-to-school season. so expectations were pretty high. a lot of positive indications when we look at employment rates, housing prices, consumer confidence is still at a near six-year high. however it was a very tepid july. what remains to be seen is whether this is a function of the consumers just holding off and being opportunistic with their spend or whether this is really a softening of spend through this season. >> walmart says that because of the rise in the social security tax, they see shoppers who are hesitant. that's a bad sign. what do you make of what walmart said? >> well, i think there's some

validity to it that there is some prepitation in it. there is a lot of spend that needs to happen. consumers have their long list of items they need to spend through this season. so i think when we look at retailers across the board, they are going to be some that really take advantage of that spend and focus pretty heavily on the season. we saw walmart do it last year. target do it last year. and managing the list and trying to get a larger share basket from those consumers when they spend their dollars. >> what about the retail price of gasoline which has risen so sharply lately? >> that certainly makes a large impact on those with lower income. they lose some of their share spend to gasoline prices. when we've seen this through the past few months that there is a bifurcation, that the higher wage earners seem to be doing fine in spending, but the lower wage earners are having a tougher time of it. when we coup elg that with higher inventory levels sgog s into the season, there's an

expectation it will be heavier this year and we may see some erosion. >> lisa myers did a story that caused consternation when she reported that because of obama care, part-time workers are losing even more hours so that way their employers don't have to cover their health insurance. do you think that's having an impact on both sides. retailing is an area where there hasn't been a lot of health insurance provided to employees. >> i think that lower income segment is probably the most challenging part. there's been more of a shift from the middle wage to the lower income, to more part time. and especially teenagers and college age where they contribute to a lot of expense. there's a concern that when they don't have those part-time jobs and they are worried about health care there's a chance they may not spend the way they did last year. >> joel, good to see you this morning. thank you. >> thank you very much. coming up, a different story on the consumer. how the nation's retailers are using technology to track you.

we've got that story when we return. [ male announcer ] it's time.

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good morning and welcome back to "squawk box." courtney reagan joins us with the story of retailers using technology to their advantage. i would hope, not to their disadvantage. >> exactly. the internet in general and amazon specifically has changed retail's competitive landscape. people believe that brick and mortar is on the brink of extingion. the use of technology is deciding the winners from the losers. nordstrom is one of the best when it comes to investing in technology. they recently had some problems with their signal. the company tells us the euclid technology was a test that came to its planned conclusion. while we did hear from consumers, there was misinformation about what the technology was. nordstrom said the information gathered was for analytics and there was no connection to the security cameras though that

technology does exist and it's being used by some unnamed retailers. this video from retail next shows how video can track retailer movements. it can change floor layouts based on behavior. >> in store analytics is very positive for a lot of retailers. we at my company routinely see that retailers can increase same store sales by 10% or more based on what they learn from the analytics they put in their stores. >> however, others think that this experienced technology is the best kind of tech investment aiming to improve those sales. >> something that we've seen not work so well is when they, again, design something that's purely for the retailer's efficiency and doesn't do so well for the customer's experience. we see where those technologies actually don't make it past the pilot phase. >> nordstrom, walmart and starbucks as some of the leaders using technology to engage

consumers. there are different types of behind the scenes technology that retailers are using that we may not be aware of. the apps and pushing different market to your phones using gps. >> i think of the movie with tom crui cruise. saying hi cindy. >> there's a finish company that is trying to use your face as a checkout. it's going to be the world's fastest way to checkout. you don't have to bring your wallet or phone. you're in, you're out. >> they've been doing this in vegas for a decade, right? they would always try to find, you know, the real shark. >> right. right. card counters. >> 90% of all consumer data was generated in the last couple of years. they have to figure out what to do with it. a lot of retailers online are trying to figure out whether or not you check out with the items that you put in your cart or not. the retailers that are in store are trying to figure out the

same behavior using technology but based on what you're actually doing in the store. some people find it's creepy, others say, hey, we can serve you better. >> do they want to fingerprint people in public housing? where are you with this stop and frisk thing. i haven't talked to you about that. where are you? >> i love it. >> you love -- you love -- you love bloomberg? >> i do. i do. >> where are you on this because you can get in so much trouble. i saw some guy tweeted one thing and he is -- he can't even -- >> i think mayor bloomberg has done amazing things for new york city and will be remembered very fondly. leave it there. >> stop and frisk. >> let's leave it there. >> would you mind -- >> we're going to go to break. >> would you mind if i frisked you during the break? >> i would mind. >> coming up -- to frisk you, that's telling. anyway, coming up, stay right where you are.

coming up, j.p. morgan chase under scrutiny from regulators. >> packing heat. >> a big -- you just said it. a big week for the fed. minutes out from the last meeting. then policy members will get together for what the markets want to hear still ahead. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]

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good morning. welcome to "squawk box" here on cnbc. i'm andrew. bill keern nin is back. we have michelle back in. joey is back but, guess what, the red arrows have not gone

away. >> nasdaq's positive. >> that's not even open yet. >> i know. >> we'll give you time. you have two hours. 7:00 a.m. >> turn things around. >> 7:00 a.m. you had two weeks. you had two weeks for one upday. you had one decent up day in two weeks. >> it's all riding on you, andrew. >> where is the voice of reason? >> i cannot push back. >> don't worry, cisco. >> it's the way you react, andrew. it's the way you react to those things. if you were calm and reasoned. >> my face? >> i don't know, calm and reasoned. >> don't go, okay. it's nothing. >> it's all good. >> yeah. >> okay. we have some news this morning, some headlines. this is all good if you work at jpmorgan because you're under scrutiny from regulators. the sec wants to know if the bank hired children of officials

to boost their earnings. at the time the commission was seeking information about employment practices in hong kong we talked about in the last hour, it's an interesting story. president obama meeting with financial regulators today. the topic, progress or lack of progress in implementing the 2010 dodd-frank financial law. among the agencies represented, fed, sec, consumer financial protection bureau and the fdic. i'm not sure that's progress. a deadline looming in the detroit bankruptcy case. any objections to the city's bankruptcy filing have to be filed by 11:59 p.m. eastern time tonight. so far the only ones who filed legal objections have been former city workers. a court hearing to determine if detroit can file for chapter 9 bankruptcy is scheduled for late october. i know joe has been working on his filing. >> on what? >> bankruptcy filing? >> eventually. >> in dodd-frank.

barry is here. we can ask him. >> did you read that? >> you have an idea. >> you must love that. >> where are we in terms of i don't know how you want to measure it? baseball games. >> 50 years. >> in terms of what's written? >> yes, but some people would say that the 50% that is not done is a horrible piece. >> we've also gone from 800 pages to 9,000 pages to get halfway done? >> exactly. >> and it was a 2010 law, and then you have obama care, the other big piece of legislation. 60 or 70%. >> two crappy weeks we're coming off. how bad it was. let's get some outlooks from our panel. joining us now on set is bob barry, barclays head of u.s. portfolios. bruce kazman, jpmorgan, i assume you're not pronouncing the k.

yet. >> if you had a k or p? >> what is that? >> that would be bad. >> why waste the letter. i don't get it. jpmorgan, oh, boy. we were just talking about jpmorgan. >> that's okay. we're going to keep a smile on our face. >> he has his job. >> all of his kids work at jpmorgan. chief economist and mapping director. anyway, where were we? we were talking about dodd-frank. how much of our five years of subpar performance have been due to either dodd-frank or obama care? >> well, i mean, i would go back to 2010 and look at a range of economic indicators. jobless claims being the best case in point. they looked almost precisely as they did during the early '80s recovery and then we hit the spring of 2010, confidence plunged.

>> obama care. >> exactly. obama care, affordable care. labor investment slowed and that stalled the recovery. i mean, it's classic just like the letter that keenes wrote to roosevelt in 1873. that clearly has had a big impact. >> so you're channelling kane for the first time in your life? >> no. >> never. i could do that, too. pick one thing that he said and say, see, he said that when everything else -- >> that's right. typically i would say a guy i'm not prone to quoting. >> you're quoting today. bruce, did -- any truth to that, do you think, or is this a much bigger ryan heart research? >> i'm going to say they're not. >> there was a piece of the study that was. obviously the depth and causes of the -- what do we call it, the great recession, that's why

we have had such a technical recovery. what do you think, bruce? >> well, i think what's been going on in the last two or three years is we've had the public sector deleveraging all of this after having the private sector be the big source of weakness 2008 and 2010. don't lose sight of the global impact. i do think fiscal policy has a big role in keeping the expansion held back here, but i wouldn't put nearly as much weight on obama care or the sentiment side of things in terms of what's really been the drag here. we've had enough real weakness in government spending, big increase in taxes here. these things directly held us back. >> are we now on the cusp of 3% growth? we say 3% growth for three years instead of 2% growth for four or five. i mean, are we moving in the right direction? shaking off the whatever that's constraining us? >> i think we are moving in the right direction.

right now it's still pretty constrained here. the fiscal drag is fading but it's not going away. the global drag is fading but it's not going away. private sector has been hurt here, particularly corporate, by the slow growth. we're in the grinding positive move in the forecast. we don't have growth getting above 3%. we have 2 1/2 to 3 in the next three-quarters. >> 3 would be good. >> 3 would be good. that tells you how our expectations and standards have changed. >> i don't remember fortunes in calling it a neoturn cop. maybe you were a little bit early. it looks like the market has come back to what you said it would be. >> no, that's right. i mean, look, i think if you go back through all of these periods in time and you look at when we get to a point, and i do think that you were hitting on something inasmuch as we are getting through a fiscal drag, labor investment is picking up, capital investment is picking up even noting cisco last week. the u.s. enterprise business was

quite strong. you are getting some pickup and investment. that inevitably brings this inflection point where the fed starts normalizing policy. i'm not one that ascribes a huge amount of policy to the fed. i think it's been largely ineffective in terms of reducing the risk of the cyclical stocks part of the market if you will, but it always marks this inflection point where you get a correction because share prices have run well above core fund amount. >> whatever the move is over the last two weeks, does that price end the fact that we are at this point of monitor policy? >> no question about it. the way all of these work, in particular '04, '94 and '83, the first leg of the move is all about the intersensitive parts of the market. utilities go down. by the way, home builders were down 25% in 2004 and the narrative at that time was the housing recovery is over. pretty laughable in retrospect

actually, but the second leg of that correction comes under the general market narratives that the fed's taking away the punch bowl too soon. you see small caps, consumer discretionary, retailers and financials all go down. that's the stage that we're at now. that's the end of it because the fed never takes away the punch bowl too soon, but we're into that correction. it will probably last through the actual event in september. >> so you're not ascribing that much credit to it? you think they've been ineffective. that's a weird way of looking at it. then the market wasn't up just on the fed because they're ineffective. last week i started thinking about there is a famous market person who could have been president of egypt, i'm not going to mention his name because he is appearing on a competitor today and advertising everywhere on twitter. i'm going to do this. you know who i'm talking about who said there is a new mobile. he said there is a wedge between where the economy's fundamentals were and where the market was that was there because of the

fed. >> it should have been higher. >> yeah. and i started thinking last week with the slightest -- you know, the minute it looks like it might be soept, i was wondering whether the fundamentals of the economy warranted 16,000 on the dow. did they? i thought he was going to be light. >> he's not having september anymore. >> it's happening in september. >> gleason said last week that one of -- he used to say 100% september. >> who? bruce, do you know? >> i don't know but i think they are on track here for beginning the tapering at the september meeting. i think we'll get more of a sense of that as we see the minutes this week giving us that sense that the process is moving here. >> if it's happening in september will you take that as a bad sign or a good sign? >> good news. good news. >> i think if it doesn't happen in september we're going to feel the data very much in the next few weeks giving them more financial market conditions,

giving them a reason to pause. i think it clearly would be a bad news sign. >> so you don't -- bernanke's son doesn't work at jpmorgan? you don't know? you didn't hire him? you didn't know -- >> bernanke might work at jpmorgan. >> yeah. >> since it's not a foreign country it doesn't matter so he knows. >> it's bad, isn't it? i remember once we asked the guy at bear stearns, he was their chief economist, we asked them about his stock. it was horrible. barry will be with us for the rest of the show. five letters, yes, it could be nap -- >> bruce kasman, thank you. coming up next, an ultra rare ferrari sells for a rare price. also, big retailers reporting this week including target and jcpenney. you go stock shopping. find out what names you should be adding to your investment cart. don't you love a good tv

cable pun. later, google nine years later. its performance since it went public. nine years ago today. "squawk box" will be back after the break. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

checking futures, the dow

opened down. here's something for car enthusiasts. a rare ferrari sold at auction for a record $27.5 million. the ferrari was owned by the late eddie smith, the former mayor of lexington, north carolina. smith a self-made millionaire bought it for $14,500 brand new. the car has been in the smith family for years. it was stored in a specially built garage. proceeds from the sale are going to various charities. >> terrific. >> i like this song, by the way. this is not for you. >> i love this song. one of the greatest lyrics ever. >> what does ryan with hrugby. >> that's true. >> that's funny. >> you don't be like it? >> no. >> this is the song of the summer. retail giants jcpenney, target and the gap ruining the summer a little bit.

joining us now with the week out preview, robert plaza. key private bank senior equity analyst. good morning to you. >> good morning. >> so we had some bad news last week. does that mean we're going to have bad news this week? >> it kind of sets the stage for another disappointing week for earnings, but given what walmart said, kohl's, macy's, the low to middle income consumer is under a lot of pressure right now. >> is there anybody you expect to be on the up side right now? >> one area i think is going to do well is the home depot and lowe's home center area. housing trends are still strong and there is definitely an uptick in sales during the second quarter. >> but nobody on the retail side of clothing, nobody's going to be a winner in that category in your mind? >> i think that at least in the fashion forward space urban outfitters has a chance to

deliver an up side report. they were ahead of the curve in terms of inventory management and rely more on ecommerce than their competitors. if they put out a piece of merchandise that's not a hit with the customers, they can pull back or cut the price and bring in something else that will replace it and help drive sales. >> shall i mention three initials? j.p.p. we talk about them all the time on the show. i don't know if people are sick of it. a friend said stop it already with jcpenneys. for some reason we care. what's going to happen? >> so many people are lined up on the short side and not expecting anything from the company, but if they can show a pulse for this quarter, you can see a short squeeze. that doesn't mean it's a good long-term buy? >> would you buy this stock? >> no. no. we're looking for managing wealth for individuals long

time. top down themes you can play for more than a quarterly report. >> if you're going to make a distinction between walmart and target, which would it be? >> target is a little bit higher end. i think it's a better run store and they also have a growth opportunity in canada. it's not going to play out so much this year in earnings but definitely in 2014 and beyond. >> what do you think of electronics like a best buy? >> best buy. well, the electronics space is feeling the pressure. even costco reported sales last month showed that there was a weakness in electronics. i think best buy's in for a tough spot here. >> this is barry knap. in general what did you hear about back to school sales? to me i heard commentary from a number of companies that sounded reasonably encouraging. of course, back to school sales correlate really strongly with holiday sales. it looked like most of the pain was in the past, which isn't terribly surprising considering we hit the consumer with a

massive tax hike in the first half of the year. the outlook, i wouldn't think, isn't that bad, actually. from here it might get interesting. >> no, that's a good point. in second quarter it's typically the least important quarter of the year for retailers. just of those that reported, macy's, which disappointed for the second quarter report, said that trends for back to school season were looking pretty good. it's definitely going to be more promotional. inventory levels were higher coming in because of the certain short falls. >> robert, we have to leave it there. we appreciate your perspective. we'll see what happens later this week. we'll continue the conversation with you as we see the numbers. up next, political instability in egypt putting pressure on oil. violence there could threaten oil and gas supplies. that he is details next. founder, editor and publisher of the gartman letter. stay tuned.

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northern terminus of the suez canal. we understand that too many buses were on the way there carrying 28 kanscripts. they were asked to come down from the bus, and they were executed. 25 of them. 3 of them in critical condition. that comes off the violence after yesterday night after a prison transporter basically ran out and the prisoners tried to escape. that's the story of the egyptian ministry of the interior. they were killed in that incident. 38 of the supporters of the ousted president mohammed morsi. a very bloody 12 hours for egypt. that raises the stakes of a prolonged standoff. and a lot of questions about where the road goes from here. what is clear is that the egyptian military chief

underscores the support that the military and the country was getting from the oil rich gulf countries like saudi arabia which continues to comment on what's happening in egypt and continues to side with egypt and the government. remember, they did also put money on the table, $12 billion. that would help the country avert the balance of payment crisis which has been in the making, but the united states is likely to review and continue to discuss its financial assistance to egypt which for the military is $1.3 billion. very important component of the military budget. also the european union expected to discuss not just relations but also aid for egypt. very trying and testing periods in the egyptian stock exchange which is swinging to the down side in the last hour or so. but just barely. so you have to keep a close eye on that. also, the pressure of the currency market and borrowing costs for the government are also sliding to the up side.

>> yousef, thank you for getting us up to date. >> if you missed the red sox/yankees game, you missed fireworks. plus, dennis gartman will talk oil and money. find out where he's putting his money. later, bank of america's president brian oracle, find out what was said and what buffet's stake in the company is worth now.

welcome back to "squawk box" this morning. in the headlines, the fed in focus as we begin a new week on wall street. the economical lender virtually blank today and tomorrow, but on wednesday investors will get a look at the minutes of the most recent fomc meeting. this as treasury yields sit at a three-year high in anticipation the fed will begin that taper bond buying program after its september meeting. by the way, you've been saying the chaps of that, he now says are less than 50-50, i think. before he was much higher. we'll talk to him a little bit later. also, the rise in u.s. treasury yields having an impact in india this morning where the

ruppe has hit a record number. that has been the worst performer in asia over the last six months as money flows out of india and the other markets. >> it's described as a crush in the ruppe in the writeups i've heard today. and, finally, "the butler." did you see "the butler?" >> no. >> that was the top movie taking in $25 million in ticket sales. "the butler" starred forest whitaker and oprah winfrey. "the millers" was second. i thought there was going to be a joke. >> i was not thrilled with the casting of jane fonda as nancy reagan. i mean, i'll give you that. >> are you kidding me? i'm not good at pop culture. that's so insulting. >> exactly. >> you've got to be kidding me? >> universal picture. >> first what they did to

margaret thatcher, and now they're going to do this? >> he draws these things out of me. that was my only comment. i don't know. >> jane -- >> i know a jane. >> i know a jane. >> annoy jane. boston pitcher ryan dempster had something to say to alex rodriguez, he certainly said it in a-rod's first at ba the. three straight inside pitches at a rod jumped out of the way to avoid. >> that must have felt pretty

good. that would have been neat to see, actually. >> i don't know what to think. >> the yankees are 7 1/2 games out. the rest of the country is saying, why are you talking about the yankees? >> because of a-rod. he's appealing, right, greco? when would he have to serve that ban? whenever they rule -- >> what? >> next season. the appeal. the appeal will actually run through the balance of the season and then if it kicks in, it's for whatever, the 150 games after that. >> pete rose says he took the wrong advice. he's gone for life. >> that's an interesting point. >> as he put it, his gambling didn't affect, you know, setting a record for most hits, whereas, what does hank aaron or what does babe ruth -- what do they say about people that beat their

record because there's some help. rose's gambling doesn't put an asterisk -- and if there's more behind that. >> why didn't you tell me this on break. >> pause. >> tell me later and then i'll share it. dempster has other axes to grind. >> i was sitting there listening. >> yeah. >> it was hemorrhoids which i have. that happens. i don't know what that is. change your diet or -- i don't know. anyway. >> are we seeing a bottoming process? >> there you go. good one. >> for gold and other commodities. joining us from virginia beach, dennis gartman, founder and publisher of the gartman letter. let's talk about gold. >> what do you make about the situation with gold?

>> first of all, let's get to the point that i'm not a gold bug but i am bullish of gold. i've owned gold for a while and i continue to own it. i think it still wants to go higher. i own it in yen terms, i own it in real terms, i think i'd rather own it in those terms. it's nothing more than currency. in a world where there are some confusion, alla egypt, money is moving to safer havens, it's moving to english speaking countries and it's moving to gold. >> you brought up gold currencies. i don't know if you've written about this, but the indian ruppe, it's described as a crash. is this on your radar at all or is this something we shouldn't worry about? the reason i bring it up, you remember the whole crisis in the late '90s related to the tybot. that was the butterfly flapping its wings back then. am i making too much of it? >> no, i don't think you are. i don't think this is small, this is relatively large.

i wouldn't call today's movement a crash. it didn't move more than 1 1/2%. we've seen more than 1%, 1.5%, 2% currency moves in other areas. it's worth keeping an eye upon. i don't think there are as many people involved in this right now as there were at the margins in the tybot several years ago. i think your point was very well taken. i think we need to pay attention to it. >> dennis did a big mia culpa earlier on whampt are you doing with stocks? >> i don't know what to do with them. i'm bored with them. i don't know whether to buy them or sell them. i trade only for my own account. there are so many other markets i'm paying attention to. i'm fascinated by what's going on in the energy market. i think it's fascinating this morning that we're seeing with all the problems in egypt, we're

not seeing the crude market rallying. it's weakening up. i find it that fascinating. >> you think it should be moving higher? >> one would think under most circumstances if somebody told you on friday afternoon that we're going to walk in and see another several hundred people killed in egypt and that there's going to be problems up near where the sumed pipeline ends at the mediterranean and told you that was going to happen, you would say, well, crude oil has to be higher. it's not. when something doesn't go up when the news is that bullish, you probably have to take a look and say, huh, maybe it's already discounted all of that sort of news. i thought it was fascinating with the egyptian stock market, if somebody had told you what was going on in egypt and say where's that stock market, you'd have to say lower and it's not. it's actually trading better. i think it's fascinating. >> a lot of folks in egypt were happy to see morsi go because he had done toeshl destruction to the economy there.

>> morsi was an absolute horrifying government. i hate to see coups of any sort but he had done severe and irreparable damage. >> thank you. thanks, michelle. good to see you. >> up next from google to the cbs time warner cable battle. we'll talk media and money and then what buffet and brian mo moynihan. futures still down. 9 out of 11 if we went down today. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade.

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futures right now indicating down about 23 points. the dow trying to make a stand above 15,000. the s&p is back to -- it's above the last break that we saw. we have a higher low than we had with that many corrections a month ago. making headlines, dozens of

wildfires are burning out of control in the western united states. it's called beaver creek but it's in idaho.

the content costs going up above inflation. so they're squeezed. at some point that has to stop. >> integrated. we want both fights, don't we? >> yes, anybody wins. >> here's the thing. what is the tipping point? people say it's when football starts. >> right. >> in terms of when the cable -- when time warner decides they have to actually -- >> when homeland starts potentially. >> i think that's a good goes. you know, all of these features take time. these people need each other. the distributors and content producers need each other and they'll find a way like any other negotiation. you're fighting with your mechanic how much he's going to up charge you. >> the ratings are hardly down. it's been marginal. >> three cities. >> they've been hanging for a long time. even in new york city where i'm a time warner cable customer so

this actually does matter to me. >> right. >> apparently it's only 45% of the market. >> right. >> so there's a lot of people on -- are you on verizon. >> verizon, fios. >> it could last quite a long time but, again, distribution, content producers, they're in an unbreakable marriage. eventually they'll come together. >> time warner, there's a lot of conversation about whether that company is up for sale, whether the company gets sold. does this have an impact on that? >> absolutely. so consolidation among distributors will help those distributors negotiate more aggressively with the content producers. >> what about directv plus dish. >> do you not see a day in the next i don't know when you -- is it five years, ten years .

they're not in the business of bundling channels, they're in the business of moving data across pipes. it's just a matter of how they charge for that service, but even though their fundamental service they provide won't change, changes can be very turbulent events. >> what you hear from the cable operators, it's a higher margin business to act as a utility and act as a pipe and not deal with the channels at all. >> right. >> it's just a matter of how they've traditionally been paid. traditionally what it says on your bill is you're getting video, right? the day is going to come when you get a bill that just says here's what your cable bill costs, what streams over that pipe is your business, right? and people -- it's a matter of

time warner cable and the other cable companies making their customers aware of what the service really costs. >> okay. let's go to google. we're doing a little look back here on the ipo. twitter will come very soon. the question is did the process nine years ago work? >> well, google raised $1.6 billion in that ipo. >> grand failure? >> well, since then they've generated $58 billion in free cash flow. >> it was a dutch auction. >> cut the price at the last minute. considered a disaster. you also have to remember, i remember reading the prospectus at the time and thinking that the business didn't look that great and they had incredible google numbers that came later. they did the conservative thing and -- >> whereas, facebook did the opposite. was facebook a failure or -- >> and wall street. >> i'm just -- i would argue you

have to keep it in perspective with the profitability of the business. the point about google is that they're a cash machine, right? and so the ipo just gets the shares out there and ultimately it doesn't matter so much. and facebook has certainly worked that way, too, right? that last blowout quarter, they're churning out some dollars too. >> while we're on the topic and we're talking about marissa mayer with the picture with "vogue". >> why did she do that? >> she did that because she wanted to prove she lost the baby weight. >> that's why she did that? >> larry ellison with some provocative manly pose? >> male ceos. you've got to flaunt it. she looks great. >> that's perfect. >> came on strong. >> that's weird. i can see where you're coming from. the pc left thinks it's some obje obje objectification for women.

>> it's a bold statement. >> it's a "vogue" spread. >> they'd love michelle obama. why. >> do you get talking points? >> no, i don't get talking points but there are a number of women ceos who have been in "vogue" they're sort of positioned on a chair more up and down. i don't know. >> it's so california. >> below the knee, i thought. it was more modest. >> where i was going with that though is do you see yahoo! being spoken truly ever in the same sentence with facebook and goo google? >> no. >> the best thing about that company is the best assets they own. she's done a great job keeping those assets in the spotlight, convincing investors that those assets are going to be monetized over time. i don't see a lot of movement in the underlying business. it's a sort of small to mid-size content. >> we didn't show you the photo.

this is the photo. the camera. get on that. >> i want to know what's on her ankles. >> those are her shoes. i never recommend you wear shoes, mary janes, that cut you off at the ankle. makes your legs look shorter. >> if you've got it, flaunt it. >> i'm just saying there are people -- >> it's always with you there. people with e.d. drugs. there are people that have alcohol problems. there are people that have -- you always blame it on other people. who are these people? did they tell you to say it or it's not -- >> nobody told me to say it. >> is it you? >> e.d. >> who is that? >> i saw a number of women over the weekend who were talking about it and some people were offended by it and i'm just suggesting there's a conversation to be had. >> that's who you are. >> a national conversation. >> a national conversation. >> a conversation about it. >> at a cocktail party on the upper east side. >> in the hamptons.

the hamptons. >> you know what you need to do, you need to change your life and your friends is what you need to do. >> what cocktail party did you go to? >> yeah, i'm down there with a bunch of rednecks. >> thank you for joining us. >> thank you, robert. >> domestic beer. anyway. >> good to have you. coming up, more on what's moving the markets. plus, the fed is back in focus this week because investors await the latest fobc. who should be the next head of the fed. coming up next, dinner for two. kayla teschy has a preview. >> there are people in omaha who are having dinner with warren buffet, believe it or not. we'll tell you who it is and what they discussed coming up next. who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today.

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bank of america ce oe brian moynihan meeting up. kayla teschy joining up with what to discuss. >> did you sit at the table? >> i would have liked to have sat at the table. they heard a little bit about what was discussed and how it went down. the ceos meet very often with the top shareholders and as of two years ago. he met buffet on tuesday, august 6th at the happy hollow where buffet is a member. buffet expects bullishness on the banking sector especially

for institution that is have a strong deposit base according to them. they praised moynihan for his efforts at the bank. more than 100% in the two years since he took that large preferred stake in the company. at one point sources say buffet thanked moynihan saying he had matched a $5.27 billion profit on that investment. that's double his money. it's of course a painful fact. there was $300 million. the real money was there. 7.14 a piece. double that. the big question that remains is whether they discussed how buffet would exit that. he's tending to exercise that. goldman sacks. he got his shares in the company three years later. the potential buffet exit was not the purpose of the dinner. nonetheless, it came out. >> what did they eat? >> i don't know what they ate

but i know that they -- >> they have a good buffet there. they have a good buffet there. >> one tea, not two teas. >> crab. >> just saying it didn't have a purpose doesn't mean anything. that's definitely what was going on. >> they had to have discussed it. it can't not come up when you have a two-hour long private dinner when you have one of your biggest private shareholders who is a shareholder. you're paying in $300 million. >> you keep your powder dry for when there is blood in the streets and the money you make is unbelievable. >> ge, goldman and bank of america. >> i mean, holy smokes. >> you have guts of steel and be ready at the moment. >> you are getting a 10% dividend from goldman and he argued that the bank of america stake while it wasn't stuck in a time of crisis, it was extremely

expensive for a bank whose cost of funding is higher than that. >> while you're here, i think it's interesting. i think that nepotism is an issue generally in corporate america but of course when you're dealing with a country like china, especially where there's so many companies that are just beginning to hit the ipo phase, that is a big question. i think the other interesting thing is, you know, this big large overhang that is surrounding jpmorgan. we thought all the banks were okay in the course of the last couple of weeks. almost every single bank disclosed new information about new investigations. the problem is citigroup, bank of america, wells fargo, pnc, most of the banks the investigation dealt with legacy issues like mortgage-backed securities. things that we knew about. this is a new issue. jpmorgan is one of the banks that's saying there's different stuff that the regulators are pointing fingers at. >> bottom line is jpmorgan's return on equity is above 15%.

the other guys haven't gotten above 10. that's the bigger issue for this whole sector going forward is given this regulatory environment, can they get roes above 10. they stayed below 10 for 15 years in the '40s and '50s. that is the big question. >> and what essentially these legalized holdings are going to take away, the last quarter jpmorgan spent $700 million. i think citigroup had an increase. all the other banks have been reserving. they're starting to go down. when you see a bank like jpmorgan -- >> $600 million -- >> that was actually disclosed by jpmorgan. they said all of these things in aggregate could cost us -- >> that hasn't historically cost a lot of money. >> what is going on? the target is now on j.p.m.'s back in a different way. >> so you're acknowledging what

i said out loud. you think they are targeting specifically. if they have a chance to go after jpmorgan, they'll do it. >> any time a regulator can spend inside its operations, it's going find more. >> get the tallest nail and the regulators want to go after them in particular because jamie diamond at one point -- >> until you get a regulator that will say on the record, we have large questions that are raised about jpmorgan. this is what i'm saying. a lot of the banks now have these monitors, have consultants. you name any consulting firm, they're now working inside the bank, reporting directly to regulators. the more you have the more these issues get raised. jpmorgan you can argue has more than any other bank because of the number of investigations. >> i am wondering whether they're being singled out and whether it's a long, drawn out affair and whether there is an

effort to criminalize the frank. >> the last five, ten years, sec capital was the target. you've seen how that's gone. i wonder whether jpmorgan is being put in that same place. >> i think the more defensive that a bank and its executive team is when regulators come in and ask the questions, i think the more questions end up getting asked. in the u.s. the people were not happy with the way diamon approached it. >> thank you. coming up, who's more likely to raise rates quickly, larry summers or janet yellen. we'll talk the fed when we return. your trading to a higher level, tdd#: 1-800-345-2550 then schwab is the place to trade. tdd#: 1-800-345-2550 call 1-888-284-9410 or visit schwab.com/trading to tdd#: 1-800-345-2550 learn how you can earn up to 300 commission-free online trades tdd#: 1-800-345-2550 for six months with qualifying net deposits. tdd#: 1-800-345-2550 see how easy and intuitive it is to use tdd#: 1-800-345-2550 our most powerful platform, streetsmart edge. tdd#: 1-800-345-2550 we put it in the cloud so you can use it on the web. tdd#: 1-800-345-2550

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your money needs an ally. can you believe, it's been nine years since google's ipo. we'll talk to one of the architects of the company's just auctioned strategy. >> what kind of person buys a tesla model s? >> i don't care. >> i drive a dodge stratus.

>> we'll bring you a profile of a typical tesla buyer as the third hour of "squawk box" begins right now. ♪ ♪ welcome back to "squawk box." cnbc. i'm joe kiernan, becky is on vacation. our guest this morning is barry knap. more from barry still ahead. first, andrew was sorkin has your morning headlines. >> the headlines we've been talking about all morning, the u.s. government looking into whether jpmorgan hired the children of chinese officials to boost the business in china. they cited a u.s. government document. jpmorgan says it's fully

cooperating with regulators. earlier we spoke with sec enforcement attorney, jacob crinkle. >> the government has to get behind the issue of were these kids really children of government officials qualified for these positions. what qualifications did they actually bring? >> also, dozens of wildfires, they're now burning out of control in the western united states. one of the most severe is the beaver creek fire in idaho which continues to grow. more than 2,000 homes have been evacuated and the blaze is threatening new communities this morning.

>> jcpenney and barnes & noble, we have target and lowe's. on thursday, sears, the gap and arrow postal. we'll keep you updated. >> keep a check on the market, u.s. equities futures. they're suggesting the dow would be lower. dow would be up. the s&p would open lower by 4. >> very stout. do you remember the commercials with the fedex guy. yeah, like that. >> just when futures aren't doing much, i don't like to dwindle or doodle on them. it's not interesting. overseas in egypt, shanghai heyer by .8%. messing in china last week. they'll have to figure that one out. i can see what the shanghai

composite did. the indian rupee, currency dropping to historic lows today despite government steps to curb overseas investment and the import of gold. the rupee is down 12% against the dollar since may. and in europe let's show you what's going on with the markets so far this morning. do either one of you guys have any news or insight about september? i just got back. i'm hearing they're saying it's

probably for the going to happen. is that for sure, andrew? can i hang it on there? >> i thought he had said originally 80%, then he came down with his view. >> i thought the claims number, greg, that iced it for september, no? >> yeah. the claims number to me would have sort of given the bulls who want to go ahead and start tapering in september a little bit of extra ammunition. even more important i think was the inflation data which showed the core inflation moved off the low levels. people like jim bullard. i didn't see anything in the data last week that would have leaned against the september taper. that said if you look at a survey that steve and others have been doing, the street has been split whether it would be september or december. i don't think anybody should go into that event with excessive conviction about it happening right away. >> the other thing we've been talking about is that we forget but even if you tapered, you'd still be adding to the balance sheet, right? i mean, tapering doesn't mean you're pulling back, you're just

adding less quickly, right? >> that's right. the fed's trying to shift the entire discussion away from when they begin tapering to these questions of how big will the balance sheet ultimately get. we're thinking up around 4 trillion dollars. also, when will they start raising the short rate. to use guidance on that, whether it's 2014, 2015 rather than obsessing on september versus december. i think they've had some success in the last couple of months in shifting the framework of that debate. i think the markets are less volatile on evidence of september versus december than they were a couple of months ago. gentlemen, would you agree that jackson hole is going to be a great debate about the efficacy of large scale asset purchases, whether they've actually impacted the economy or not, the title of the event, the fact that it's being hosted by ester george who's dissented. is this a bash qe and a tapering?

>> i think de facto that's probably what's going to happen. there are a lot of folks out there, not all attending jackson hole, who are really questioning whether we've reached the point of not just diminishing returns but negative returns to doing additional quantitative easing. even if that's not the headline coming out of some of the panel discussion, i'd like to bet in the question and answer period some of the discussion and some of the off the record chatter will be on the minds of a lot of people. >> is it not ironic that the only real senior central banker is karoda? >> you have daniel sabina. the rising markets count a lot in this circumstance. they're examining global dimensions of unconvinkoconvent policy. a couple of years ago they were worried that quantitative easing was pushing the hot money to the markets. michelle was talking today about the rupee now under a lot of downward pressure. they're dealing with the exact

opposite problem. ivq is some of the central bankers in the emerging markets are singing a different tune about how bad quantitative easing has been. >> that's a great point. they make a good point. they don't like the volatility. the money goes in. so they're constantly dealing with it. i think it actually proves the point even more in some ways. >> michelle, you're right. i was in brazil last week talking about the capital controls. it was the right thing to do to put up gates to slow the flow of hot money. it meant that their currencies weren't so over valued when the inevitable reversal came around. what i think is intriguing is the volatility that the talk of paper has happened around the world. all of the top money is a bad, bad thing. >> if you guys had to bet right now if the decision had to come from the president, who would get the nomination? >> larry somers. >> i think it's clear that the people closest to the president

on economic issues are saying larry somers. all evidence is that the president is now. what are the costs? are they willing to bear that cost. >> what upsets everybody else about larry summers is it's still the essay from harvard? >> i think it's still one thing. it's this combination of an entire career spent rubbing a lot of people the wrong way and making a lot of enemies. if you do that for 20, 30 years as larry summers has, they get the knives out when you're being nominated for a job. >> i think it's more than that, too. let's not overlook that, you know, one thing people often forget that obama has a heck of a strong bench to choose from. whether it's janet yellen or larry summers, they'll try to make the comparison it's not just that larry has the negatives, well-known issues that neil was referring to there but janet yellen has spent her life in centralbanking. she has been an articulate and

meticulous practitioner. this is not anybody but larry summers decision. the president has two really strong candidates to choose from. >> every time you think summers is out, something from somewhere that makes it look like he's definitely in. neil, do you use amazon? have you seen him around? have you heard that laugh in any of the halls? we play that laugh a lot here. is everyone going to be okay? >> no doubt from the washington post. i think we ought to get amazon prime for free. >> all the movies for free. now a book for free that you can borrow? yeah. >> gentlemen, do you think that republican senators prefer summers or yellen? my sense is it's probably summers, right? >> i've talked to a few folks on the hill. my distinct is that they prefer larry summers notwithstanding

the fact that he was the champion of fiscal stimulus which was not popular with the republicans. they like he is skeptical of excessive regulation. they think he might be a little more trustworthy on that front. they like the fact that his reputation, i'm not sure whether it's true, his reputation is he's a little more hawkish and less enthusiastic about quantitative easing than janet yellen. >> what do you think the market actually wants? i ask you. what do you think the market really, really wants? >> yellen. >> i agree. i think the market wants yellen. the market wants yellen because the market prefers the devil they know to the devil they don't. >> they love their addicts. near term addicts. >> true. i listen to your show and i watch the blogs and all of that stuff. i'm not convinced that people in the markets love qe as much as you're saying. >> no, the short-term guys do.

the long-term guys don't. >> i will tell you, i have clients who a year ago we were having these big philosophical or economic debates about whether qe forever was warranted and then a year later it was i can't believe they're going to take this away. so he's got a point around all of this. people don't want change. they don't want the uncertainty. i agree, most people think it's been ineffective in terms of macro economic growth and it hasn't boosted cyclical stocks yet. they don't want to take it away. >> i think people think it worked. you described less of the markets. a lot of people think a lot of the markets zblofd describe working. >> no depression. >> it worked. >> no, no, no, no, no. i would definitely differentiate between qe 1, this is a crisis measure, increasing the monetary base during the crisis. i think milton freedman would agree with. qe 2, operation twist. qe 3, i think there would be a bigger, broader debate did it.

>> thanks. >> gentlemen, let's make one quick point here though, janet yellen, if you read her speeches, if you see she's been consistently part of the leadership decisions she's on board with tapering qe 3. so if the world unfolds as janet and the rest of the expects, qe would be history by the time we're having this conversation in a year from now. in the debate whether it was larry summers, janet yellen, who's better in terms of having more qe. that would be very academic. >> is "the economist" for sale? >> they don't bring those conversations down me my level. >> you may be next. i wouldn't be laughing too much. >> 50% owned by "the financial times." >> i think if robert was here we could ask if they were interested in selling out their half. >> greg is right, the fed will be more hawkish. >> all right. thank you. >> good conversation. coming up, we're going to talk about the latest from

egypt. we'll bring you an update from cairo next. still ahead, it's been nine years since google's ipo. we'll talk about one of the architects of the auction strategy. check out the "squawk box's" market indicator. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this&is gonna be big. hp moonshot. it's time to build a better enterprise. together. (announcer) scottrade knows our and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help.

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earnings report just in from retailer saks fifth avenue. 10 cents per share for the second quarter they lost. revenue was short of consensus. sachs is in the process of being acquired by hudson bay. $16 per share deal. a lawyer for former egyptian president hosni mubarak says he will be released from jail son. yousef is joining us. another twist. >> reporter: absolutely, michelle. the twists keep coming. according to hosni mubarak's defense lawyer, the story goes that he has been cleared of corruption charges. not just that, he will also be

released possibly within the next 48 hours, only a few administrative hurdles to get through. now as much as he may have been cleared of that charge, the former president was ousted in 2011 was tried and convicted of failing to protect protesters that year and sentenced to life in prison. but that case is still pending a retrial. we would be surprised, that's according to experts, at least, if the former president is allowed to walk given the current heightened political tensi tensions in this country. the last fuel needed to be added to this fire would be that fuel. the president could walk. that would bring out more protesters to the streets. at least that is what some analysts are saying. if anything, the judicial officers will try to make sure that at least he is kept off the streets until more clarity emerges on the political front. >> this may be a crazy question.

what's his mental faculties at this point? what's his health? is this any possibility of a precursor of him coming back into power? >> reporter: that seems highly unlikely at this point. his mental faculties are still intact. he does respond. he does engage. he is quite an old man now and as you can see from images in the past, he's usually wheeled in on a stretcher. he did not appear at a hearing last week. they kept him at his detention facility because of the difficult security conditions and what seemed as a serious risk to even try to transport him to the courts. and now as to whether he would ever stand into a position again of power, that at this point does not seem very realistic, especially since he also has quite a lot of opposition, not just from islamist political parties but even from mainstream, more liberal

egyptian movements. so that is unlikely to happen. who knows, michelle, maybe you're on to something. >> yousef, thanks for being kind for what was not a good question. thank you very much. joining us from cairo. let's get back to our guests, head of the u.s. portfolio. are you paying attention to egypt at all? >> no. dennis gardner made the point a little bit earlier about oil and whether oil has moved up in reaction to this, and there's a bit of a debate about you'll see it move from 100 up to 110, wti moved from the low 90s. >> worldwide tax. >> and i viewed it as largely a function of europe coming out of recession and underlying growth fundamentals getting better in the u.s. there's still some debate about whether there's a geopolitical increase there. they would argue there isn't a geopolitical premium, that it's moving up because the growth outlook is getting better.

that's the only place to look to see whether that's, you know, really impacting the capital zblarkts g markets. >>. >> geopolitical events, how are you doing in that? it will decide greece's fate. >> you hear people mention these as potential negative events. every election is a positive for the markets. elections breed optimism even when it's totally unwarranted. mario monti gets elected prime minister and then everything plunges in the aftermath of that. the markets will rally into that and europe will fade a little bit after the fact. >> i thought you had a question. >> no, i don't. i'm just sad. he depresses me. >> why? >> you don't depress me. i love being with you, but he's being depressing recently. >> look, the reality of our broader view is that unlike the general narrative i'm hearing

that growth is really slow and tepid, i actually disagree with that totally. consumption has been strong for the last three-quarters despite a massive tax hike. public uncertainty has fallen. labor investment, capital investment are picking up. the underlying fundamentals are getting better. >> we are at a turning point. have the markets priced in that turning point? >> they have not. they have not. this is what typically happens is you get this 8 to 9% correction during that inflection point when the fundamentals have to catch up to share prices. you have three months, six months of consolidation, but then those periods after that are usually very good. so my outlook for '14 is positive. think about 1995. the fed tightened aggressively in '94. the stock marked went up 34% in '95. once you get past the turning point, the outlook is pretty good. we have to get through it. >> thank you, barry. coming up, it has been nine

years since google's much heralded ipo. we'll talk to one of the advisors behind the strategy. plus, what kind of person buys a tesla model s. we'll bring you a profile of what a tesla owner looks like. stick around. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me.

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what is the possible justification for apple sitting on $137 billion of cash? >> he's a sociofinancial inflection point. apple is just a stock. >> is there a strategy point we should be expecting. >> managing inventory levels will be the key. >> could be a technical breakout for the up side for natural gas. >> what do you recommend for the people here? should they get involved in this sector broadly? >> it's sector specific. it's the network names i would be looking at. welcome back to "squawk box." honda wants to save endangered

drive-in movie theaters. the cost of updating to digital projectors which can run $75,000 per screen is driving some drive-ins out of business. so honda is launching project drive-in. consumers can vote to save their favorite drive-in. honda will give them digital projectors. they're launching a series of pop-up drive-ins. cloudy with a chance of meat balls, 2. teenagers everywhere can rejoice. among the other entertainment headlines "the butler" took in $25 million in north american ticket sales. "the butler" which stars forest whittaker and oprah win free. >> "the mill letters" was second and "jobs" brought in 6.7 million. that was good for seventh place. coming up, a profile of who

is a tesla buyer. yes, they're men and, yes, they're wealthy. as we head to break, take a look at the futures. giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.

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back to "squawk box" this morning. stocks to watch. investor carl icon has increased his stake in chess iss chesapea. from 9.98%. thank you for the glasses. you'll recall that icon led a board room coup that led to the ouster. zillo is in the news. 2.9 share secondary offering. it will use the earnings for corporate purposes. the ipo shares will sell 2.8 shares separately. i think there's a more interesting piece of this. zillow is purchasing a new york city real estate site for $50 million. for those of you who don't know what street easy it is, it's a way to figure out what everybody's apartment in new

york is and nobody sells it. >> the mls of new york. >> u.s. steel has named president and chief operating officer mario longhe. its next ceo. he'll be replacing the retiring john surma who's retiring. >> you no what he? >> you need glasses. >> i need glasses. >> is it your eyes or your brain? >> my eyes. >> your eyes and your brain. >> i missed two words. >> numbers were wrong. >> no, 9.89. >> it happens. >> then there was 8.98. >> right. >> i wish i was almost 30. >> the names were easy. neither one of them should have caused a brain fart. must be an eye problem. >> do what i do each morning. no, mack, you have to bring the cameras closer. yeah. check on the markets. >> what are those? >> those are readers. >> that is a look. >> is that something? >> you look like waldo.

is that comfortable? >> keep them on my nose. >> exactly. >> this is for reading, not for distance. >> only for reading. yeah. uh-huh. >> are those -- i mean, are those gender -- it doesn't matter what gender you are? more for women? >> lindsey parker. >> people don't wear red glasses, do they, if you're -- i guess you could. you just did so i guess you can. go ahead. the shape of them is a little -- >> yeah, very -- >> okay. >> let's get a check on the markets. rick santelli joins us from the cme, rickster. >> i think andrea needs to give larry summers those glasses. anything will help at this point. john lennon spin there might put him more mainstream. >> deep down who would you rather have, rick? summers or yellen? or it doesn't matter? >> well, i don't know. if somebody's going to put me in a taxi cab and the driver's blindfolded, i guess it doesn't really matter whose eyes are

covered up, does it? >> so it is a -- you don't really have a preference? it's equally bad? if you had to pick -- >> you know what, larry summers might be more interesting, you know, watching a more, i don't know -- i don't know, is insulting the right word? i guess round the whole square peg. that whole dynamic might be interesting. >> bull in a china shop? >> yeah. yeah. i don't know. i don't really see the bull in the china shop. i think that's a media driven issue. i think it's not about the ladies at harvard that are cheering him on as much as for me, it's some of his '97 to '99 issues regarding regulation, enron exemption. truly, if we're going to focus on somebody, let's focus on the realities, i think, that would be the prerequisites for him not to or to get the job. a lot of things could have been avoided if we could tweak a few

things in '99. i'm not even thinking mark rich here. >> i'm nod interested, rick. >> here we are at 284. fresh highs for two plus years in our complex. we see what's going on in emerging markets as they try to figure out is the tsunami going to be liquidity driven or is it going to be the under toe that takes it away because as much as we talk about the emerging markets being proactive, a good part of their problem are the countries that are in the water creation business like japan, like the u.s., like china, like europe. you know, i found it fascinating the debate is -- the new debate is that maybe the fed orchestrated these higher rates. i don't know. it seems if there's enough media outlets, they can make anything seem rational, i guess. >> going with it? >> no. >> all right. thanks, rick. let's find out who's been buying the tesla electric cars.

we asked edmonds.com to put together a model. joining us with the details. someone has to fit in with how far you drive to work, i guess, phil, and you have to have money. >> definitely you have to have some money. i think the bottom line is when you look at who's buying the model s, there have been 13,000 sold since june of 2012, you're looking at somebody who compared with other high end luxury cars, joe, they are younger, they are wealthier and they are overwhelmingly men. who are's the profile that they put together. they got this from looking at vehicle registration data as well as online search data. the sweet spot for the tesla model s, ages 35 to 54. more than half the buyers in that range. 83% male. income over $150,000. 56.5%. that is a much higher percentage than other high end luxury cars. break down in terms of ages. who's buying the tesla model s?

the under 35 versus 35 to 44. the sweet spot though is 35 to 54 although 16% are over 64 years old. the model s has definitely been skewing much more towards younger, more affluent buyers. they say it's the technology that are bringing the buyers in. 77.3% of the buyers make at least $100,000. again, more than you see with other brands. almost 84% are men. as i mentioned earlier, if the youngsters who are most attracted to the model s. >> 33.3% of tesla buyers are between the ages of 18 to 44. again, that lines up pretty closely, almost virtually identical to that of a porshe pan america. mercedes s are 21% are between

the ages of 18 and 44. so it is scaling younger. >> keep in mind tesla is raising both the price and the production rate of the model s. that is something that you do not see with other electric or extended range electric vehicles. when you're looking at the average price paid, guys, not what's being charged but what's the price being paid when people take delivery of the model s, by one estimate it's well over $90,000. take a look at shares of tesla. again, this stock has been fading between 135 to 145 range. right now starting the day at just under $143. it's interesting when you kbiel all of this data to see what you're looking at here, don't compare this with other luxury cars. compare this -- or don't compare whatever the lexus does, compare it with other luxury cars. that's a more accurate comparison, if you will. >> phil, i've got two questions for you. one is the 18-year-olds. are there 18-year-olds buying this cars? >> from vehicle registration data.

you know, i don't think there's a lot. >> their dad is buying the cars. >> you're exactly -- 18 to 24 years old, 0.1%. 0.1% out of 13,000 is, i don't know, what is that? >> a handful. >> then my other question is you broke down the numbers, $150,000 income plus but i wonder what the real breakdown looks like. i'm assuming it's -- >> plus, plus, plus, plus. right. >> yeah, they don't go any higher than 150,000. >> the median is a little higher. >> absolutely. what's interesting, guys, compare that with the s class, the e class from mercedes as well as the 5 series, much higher. >> does the s class really count? it looks like a fudy duddy car, you know? >> that's why you have the younger buyer going with the model s. those are more comfort, the s is more comfort. >> i've driven the smaller tesla

that i can barely fit in. >> i drove one two weeks ago. i love the zblsh they were functional. >> the dashboard is so pretty. it's really gorgeous. girls like it. >> quality is there which is weird. i didn't tell you about the hyper loop. what about the hyper loop. i'm worried about that. >> you were gone. >> joe, why are you worried about it? it's not going to be built any time soon. >> if you're going 800 miles an hour and you hit something, i figure that's going to require some weeks in the hospital at least. >> what about the chinese bullet train? >> isn't it scary what happened? i'd like to do it. i'd like to go to l.a. in a half an hour. >> i think everybody would. any kind of a mass transit requires so much infrastructure. look how dysfunctional we are in this country when it comes to building anything with mass transit. i would be stunned if you get beyond a prototype. seriously. high speed rail.

we're going to build high speed rail. we're off to the races. >> no. no. no. that was a ridiculous government idea. build it between places where no one travels anyway. >> exactly. >> good piece. robert schiller. if you lose robert schiller, if the left loses robert schiller -- you lost it over the weekend. >> and bono. >> saying you have 2000 -- the average entrepreneur, there's 2,000 startups, only a couple stick and only one or two of them become huge, how does the government pick out of five things to do when it takes 2,000 in the private sector to do something? >> joe, that's why i wrote a piece and i got a huge response to it. the hyper loop is going to be built, elon musk has to build a prototype. nobody else has the inteps tess at this nal fortitude to do it. >> elon musk is amazing. >> government didn't build the

railroad. >> i know. the internet. >> when the government took them over in woodrow wilson they bankrupted all of them. >> senator al gore built the internet. >> next up, 9 years since google went public. we'll speak with an ipo expert. bill hambrecht. he introduced the style that did phenomenally well. we'll be back. right now, 7 years of music is being streamed. a quarter million tweeters are tweeting. and 900 million dollars are changing hands online.

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well, first, yes, i really do think it worked. did it work to its absolute efficiency? no. because, you know, this was the first time the auction was used in the traditional underwriting group. we had done a number of offerings before, but we were

pretty much on our own when we did them. this was the first time the traditional underwriters used the system so there was a lot of push back. there was a lot of attempts to guide the price and do -- keep control of the process and not let it be a true open auction. >> and so why do you think it has not been used in any real high profile ways in the past nine years? >> well, you know, it has been. we've done 24 auctions. there have been some very good companies that have used it. but, you know, it's a difficult decision. first, the traditional underwriters really don't like it. they don't want any part of it. >> because they lose a lot of money. >> well, they lose control. you know, the heart of an underwriter, his leverage to his account base is the ability to allocate shares and the ability to price them under the market so his customers get a bargain. >> right. >> and an auction takes both of those things away.

so they really hate it. and, you know, hey, it takes a strong-minded ceo who has confidence in his ability to run a business and is willing to, in effect, take on wall street. >> doesn't the strong-minded ceo sometimes need the balance sheet of the particular bank that's helping them with the underwriting, they think they need the help of the brokers pushing the thing down the customers' throats as well? >> well, sometimes, yes. some of the major companies have relationships with the big banks that are -- you know, will basically keep them as a customer for the bank. but, you know, an auction basically goes out and opens up the offering to the whole market and, you know, to me a sales force 90% of the time just gets in the way. >> a different question. how broken is the ipo process, not just nine years later after google but, you know, people

working say there's not enough research anymore. there was a big story in the times saying analysts and analysts are being called in, i don't know if you had this experience, analysts are being called in for the pitch with the bankers. >> i'm a strategist so i don't have to do that. you don't have to do that. then there's the secondary sort of private market for these shares so people don't even want to go public. >> right. look, i think the old system is dysfunctional. it's been dysfunctional for the last 50 years and it changes very slowly. i personally think there have been several things that happened since the google offering that are going to change the ipo process. the first thing was free writing where you are now allowed to put any information you think is relevant to an investor. you can put that up on your website. you have to make it available to everyone but you can put it on

your website. i think the second thing that is going to be really important, the jobs act has now made it legal to have pre-ipo research. we've done it twice and it really works. the prospectus is the wrong vehicle to deliver information to an investor because an investor wants to know what's the outlook? what is the forward 12-month estimate? none of those things are in the prospectus. >> right. >> we found putting up a research report alongside the prospectus gives the information to the marketplace that it needs. now i think that's going to be a major change. >> right. >> bill hambrecht, we'll leave it there. nine years later, we'll see you how it works. >> and for getting up early. >> and for getting up early. that is exactly right. you didn't thank me for getting up early. >> it's your job.

>> no, but it hasn't been for a while, for ten weeks. you're kidding me. 3:30. coming up -- i love it. that's the king. we'll be headed back to bed at 3:30 after winning the -- >> wound here. >> wow, that's quite a vacation. >> no, no, no, no. anyway -- not that kind. on the move ahead of the u.s. trading day, we'll talk it over with jim cramer who's also in his best part of life next. the most free research reports, customizable charts,

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to get back -- welcome back to "squawk," jim cramer joins us now. they painted a sign on your street and the town knows that street. there's a street right next to where i live called windemere and they forgot the "r." >> i tweeted this, jim cramer. 120-year-old street, they spelled it wrong. >> spelled it wrong in the town. >> yeah. it's kind of -- >> in summit, new jersey. hill and crest, it's all one world, since that housing development put in 1898. >> they put a space in there.

>> that's wrong. >> i'm not going to use this to bash government, either local or town or anything. >> chris christie's painted the sign. >> never happen in westfield. >> west and field. >> it's not spelled that way. >> jim, the -- is the economy -- can i believe the claims number? i'm hanging my hat on the claims number and hoping there's a reason rates are going up and hoping it's a good reason. >> isn't this the debate? we feel what's happened is that the industrials can carry us. all of the stocks, to me, look like they could take off here but hanging by a thread like other companies. you know something? i've got to tell you, the best acting stocks are gold stocks and that's hard for me to understand. they're the group bouncing. on thursday and friday, housing stocks moved. we can use another group besides industrials. >> housing, you any, has had its pullback, which made sense because they had run aways, right? >> i think it has, if mortgage

rates don't go to 5, the bull pul pullback's being digested you didn't flow whether to lock in a mortgage, that's an added decision to buying. "usa today, how affordability's not great in the hottest area. if we totally lost housing and it doesn't come back in the fall and lose industrials, what are we supposed to be buying here? that's hard core. >> everything goes three steps forward, two steps back. we foe currenw focus -- you nev when 2 is going to be 15, the two steps back, right? >> at least you admit that there's been three steps forward. a lot of people, joe, who fight that. you and i both know, that's actually in the mix. >> yeah. the market -- everything, everything that we look at, it's just the way it works, isn't it? people that short-term guys making money and they're out and get rid of that before the

strong hands assert themselves again. you think we're still in the economy and the stock market, still in an uptrend? >> i think if europe is coming pack and china comes back, because of europe, stocks can go higher. these real estate investment trusts are horrendous. the utilities are horrible. don't want to lose those groups too much. they're very bad. >> raise the minimum wage, jim? >> well, okay. i mean -- >> should we? i don't know. i mean i want -- if i'm starting to consider that maybe i can almost connect the dots between the low end having, you know, maybe that being a problem with the demand for the whole economy, there are people that just aren't doing as well. >> fewer than jobs. >> that group -- we need that class. eem that shop at walmart, i don't know. they aren't shopping as much. if they're minimum wasn'ter people we need to raise minimum

wage job. >> you can have fewer people with higher pay or more people with lower pay. >> with the affordable health care coming, how much can a potential hirer take? how much do they have to take before they say it's not worth hiring? >> 29ers, 49ers and minimum wage on top you stress the low end. >> people who can't work more than 29 ors can't hire more than 49 people. >> that's at fordable care point jim was making. if you add minimum wage shock. >> if "vogue" asked you to pose laying back on a bed demurely -- >> only if is $100 bills by mr. white. >> thank you. we'll see you in a couple of minutes. >> he would do it. >> he would look good. >> you would do it and look good, too. >> charming, andrew. >> this morning, we'll give

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but you're -- >> no, the economy's getting better but we have to go through a period of adjustment. you're supposed to buy it but it's early to do that. >> all right. >> thank you. >> rough, rough coming back. but i'll see you tomorrow. >> great to have you back. >> thank you. >> good to see you. >> join us tomorrow. great to see you. "squawk on the street" begins now. good monday morning. hope it was a good weekend. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, good to see you. david faber is off. futures wobbly here, after the worst week for the year for the dow last week. news headed our way this week, including fed minutes, jackson hole, retail earning. ten-year yield looming large around 2.85 after hitting 2.86